Do VCs Help in Building a Technology Platform; Part 2

Posted on December 5, 2008. Filed under: Uncategorized |

Over three years ago, I wrote a post titled, “Do VCs Help in Building a Technology Platform?“.  The premise (as you can go see), was that VCs who once primarily invested in companies built on Microsoft’s platform, had almost universal switched to the open source LAMP stack as their technology platform of choice.  This activity obviously helps reinforce the chosen platform, as the more apps built on top of it, the more universal solutions that are then available for that platform.  

I wanted to offer two updates that relate to this theory/proposition.    

First, Microsoft recently announced that startups can get three years of free software and service.  From my point of view, this thoroughly supports the theory that where startups are deploying matters.  Otherwise, why do it?  It also reinforces the point that developers have been moving away from Microsoft — choosing other platforms, which is what likely promoted the discount offer.

What’s perhaps even more ironic is that three years ago, the key alternative to choosing Microsoft as a platform on which to deploy your startup was Open Source (LAMP).  Fast forward three years, and there are three new entrants — Salesforce, Facebook and Amazon’s cloud service — that are all demanding an amazing amount of attention from VCs.  What’s more, each of these companies are doing a good job actively  reaching out to the VC community and encouraging development on their platform.  

It obviously would be overstating it to suggest that VCs help “choose” the platform that wins.  That said, it is a powerfully positive indicator if VCs show confidence in a new platform by shifting where they deploy their capital.


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3 Responses to “Do VCs Help in Building a Technology Platform; Part 2”

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Yah. This is spot on. But they’ve known about the notion of platform building straight along at MSFT and have lost their mojo – the vast bulk of apps written in C use MSVC compiler; but where does this matter if the platform is an iPhone? VCs don’t really set the trend they follow the trend of the talented entrepreneurs who are making their early decisions based on fiscal responsibility. Why pay Microsoft? Or Oracle for that matter – for all that extra cost overhead? The argument used to be that everyone ‘knew’ those platforms and therefore building and maintaining was cheaper; that hasn’t been the case for a long time. You can scale either MSFT or Oracle based apps, technically, but not cost efficiently. And I think this is the key driver. So if VCs see that the good tech entrepreneurs all show up and don’t bother to use third party “platform” products then they naturally just gravitate away. This is particularly true in any hardware environment – why deploy a new type of compute device that is dependent on an OS in which you can’t control the source code for developing embedded systems and ASICs? While the VC decision in this case may appear to be self-referential logic in this case that logic that just happens to be correct.

sure it’s got nothing to do with the fact that if you want uptime in a web service you don’t use microsoft.

Microsoft has never had a good version release of their webserver, it’s a forced trend. People build on microsoft then realize it doesn’t scale and convert. Got nothing to do with anything else but that.

Economy notwithstanding, it’s a great time to be a tech entrepreneur. We are indeed in the age of dev platform proliferation. All the major players need examples/case studies of hot, thriving startups using their technologies and *not* their competitors. I look for the trend to continue as dev platform providers fight it out for entrepreneurs.

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    …focusing on the evolution and economics of high technology business and strategy. By day, I am a venture capitalist at Benchmark Capital.


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